Canada's inflation rate hit a six-month low as the continuing strength of the loonie helped hold down prices.
The annualized inflation in February was 1.8 per cent, compared to 2.2 per cent in January.
The core inflation index, which excludes volatile items like energy and food, did creep up slightly, going to 1.5 per cent from 1.4 per cent.
That is the first such rise since June.
From month to month, core inflation rose 0.3 per cent to February from January.
However, analysts suggest the Bank of Canada has room to continue to cut interest rates and boost the economy without stoking inflation.
Some areas where prices fell:
- Food: Fresh fruits and vegetables were both substantially cheaper, falling 16.9 per cent and 14.5 per cent respectively;
- Computer equipment and supplies: Fell 15.4 per cent in February; and
- Car purchases or leases: Fell 6.8 per cent last year, the biggest drop since February 1956.
Some areas where prices rose:
- Energy: Pump prices are 17.1 per cent higher than a year earlier. Home heating oil and related fuels rose 23.9 per cent; and
- Home ownership: Mortgage interest costs and home maintenance costs both rose.
Regionally, Ontario saw its annualized inflation rate fall to per cent. In the West, inflation was measured at 3.5 per cent in Alberta and 3.4 per cent in Saskatchewan.
U.S. wholesale inflation
The U.S. Bureau of Labor Statistics released its Producer Price Index numbers on Tuesday, which showed prices shooting up at the fastest pace in 15 months.
After excluding food and energy, the core rate rose 0.5 per cent -- the biggest such jump since a rise of 0.9 per cent in November 2006.
Overall wholesale prices were up 0.3 per cent in February, following a one-per cent jump in January.
Some analysts fear that rising energy costs are starting to affect other areas of the U.S. economy, thus increasing inflationary pressures.
The U.S. Federal Reserve is looking to cut interest rates to stimulate the U.S. economy, but rising inflation could constrain how much it can act.
The Fed has said it views the possibility of recession as its bigger problem, but some fear a "stagflation" scenario, where the economy stalls and inflation rises.
With files from The Associated Press
